To paraphrase Ronald Reagan, “There they go again!” As we close in on a legislative session where a high risk health insurance pool is sure to be discussed, the same old tired arguments are being trotted out by the insurance industry and their allies to make this health reform as insignificant as possible. One example is the perennial desire by the insurance industry to have the taxpayers foot the risk pool costs out of general tax money. Big health insurers love this idea because it means they can shift their highest risk people (who cost the most) off of their health plans and into a state-supported pool. Does this mean lower premiums for people the health insurer hangs on to? If you believe that there’s some beach property behind sandbags on Topsail Island I’d like you to take a look at.
Of course any savings will go to profits – and taxpayers will be left holding the tab for insuring high risk folks, giving insurance companies even more incentive to shift people with high medical cost to the risk pool plan. Spreading the costs of the risk pool across all health insurers in the state is a basic principle of insurance that has been around since at least 1935. If the costs of a risk pool are spread among all insurers, then no insurer has an incentive to dump people into the risk pool who they could insure. For example, high risk drivers in North Carolina are in a large risk pool where excess costs over the (very high) premiums collected from risky drivers are spread across every other auto insurer in the state. The result? NC has some of the lowest car insurance premiums in the nation and the lowest rate of uninsured drivers. That’s insurance – spreading the costs among policyholders means everyone wins. Sticking pool costs to taxpayers through the general fund may mean bigger profits for the insurance industry but it sure isn’t good for anyone else.